Reports from a country in crisis, from someone who returned to it two years ago

Friday, August 07, 2009

Latvian healthcare disaster, part 4

"Recipe plus", the largest Latvian wholesaler of drugs, stops the supply of drugs to Stradins Clinical University Hospital, one of the two largest hospitals in Latvia, due to the hospital being 0.9 million lats (1.3 million euros) behind in payments.

Other hospitals are badly behind with their payments to suppliers and risk being cut off, as well. The healthcare budget cuts are making the system to fall apart.

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Latvia faces a real paradox: Devaluation can be good or bad depending on its balance of payments position and policies,ie whether the value of exports/capital inflows can be achieved to exceed the value of Imports/capital outflows over a longer term.

Besides the necessity to restructure Latvia's personal taxation system, there is a drastic need to introduce legislation to close loopholes to any tax avoidance schemes: eg any transfer of large amounts of capital to tax haven countries such as Liechtenstein, Monaco,etc. Such exit of capital from latvia should require a statutary reserve deposit scheme with the national bank of latvia, as a form of security or disincentive to avoid tax.

Also increased revenue from increasing import duties on items classified as luxury goods should be considered, such as upmarket cars which currently contribute to the detrimental traffic congestion and flow-on costs to roadworks upkeep in latvia.

Increased import substitution into viable technological, manufacturing and agricultural industries in latvia, through temporary loans/subsidies or investment loans is also required as part of an overall solution.

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